Transaction volumes in Ho Chi Minh City’s apartment segment as well as in the villa and townhouse segment were down in the first three months of the year, according to the first quarter report released by Savills on April 12. Other segments, such as retail, office, and serviced apartments were relatively stable.

Savills noted that Vietnam’s real estate market in general and the Ho Chi Minh City market in particular are in a period of stability. The apartment segment had about 5,200 new apartments for sale in the first quarter, down 47 per cent quarter-on-quarter. Total primary supply in all segments reached around 42,500 units.

At the same time, the total volume of transactions in the first quarter fell 13 per cent quarter-on-quarter, at about 8,800 units. Grade C transactions increased 10 per cent while Grade B declined 35 per cent. Market absorption was approximately 21 per cent, down 1 percentage point quarter-on-quarter due to lower absorption rates in Grade A and Grade B.

Savills forecasts that supply from the second quarter of 2017 to 2019 will reach 62,200 units, of which District 2 and District 7 will continue to see the most, with about 21 per cent each. In the villa and townhouse segments, primary supply declined by 14 per cent in the quarter to 2,600 units but was up 25 per cent year-on-year.

Trading volumes were not very positive, declining 11 per cent compared to the last quarter of 2016, in which eastern districts accounted for 74 per cent of all transactions, especially District 9, with 49 per cent. The absorption rate was 34 per cent, up 1 percentage point quarter-on-quarter and 12 percentage points year-on-year.

From the second quarter of 2017 to 2019, the city will receive about 14,200 units from 44 new projects. Eastern districts are expected to account for 55 per cent of total future supply.

In the office segment, a number of Grade C projects in Binh Thanh district entered the market, offering over 4,400 sq m. Total market supply in the first quarter therefore reached 1.6 million sq m, stable on a quarterly basis and up 1 per cent year-on-year.

Savills also reported that operating performance was maintained, with average rentals increasing by 1 per cent quarter-on-quarter and 2 per cent year-on-year. Rentals rose due to a scarcity in Grade A and Grade B vacancies in the CBD. Average capacity was 97 per cent, stable quarterly and up 2 percentage points year-on-year.

The market is expected to receive over 390,000 sq m of new office floor space by 2019. In the remaining three quarters of 2017, the figure is expected to be 123,000 sq m, equal to 8 per cent of existing supply.

The serviced apartment segment was relatively stable in the quarter, with total supply of 4,600 units, up 2 per cent quarter-on-quarter and 6 per cent year-on-year. Leasing occupancy averaged 87 per cent, up 5 percentage points year-on-year, with average rentals also rising 5 percentage points over the same period of 2016.